Nearly a month after President Barack Obama asked states to consider letting insurers restore canceled health policies that don’t comply with the Affordable Care Act, participation among carriers has been spotty and hasn’t followed along traditional political and geographical fault lines.
His announcement left state insurance departments with the choice of allowing insurers to let policyholders renew already-canceled plans before Jan. 1, when they’ll no longer be an option for consumers because they don’t meet the new health law’s requirements for comprehensive coverage and limits on out-of-pocket costs. Policies sold after Jan. 1 have to include services such as preventive and maternity care. Policies renewed before the cutoff will lapse sometime before the end of 2014, forcing consumers to find new plans.
Most states already allow insurers to push for renewals before policies have ended, and in some states calling extra attention to that policy helped avoid widespread cancellations. But Obama’s fix applied to policies for which insurers have already sent cancellation notices to consumers. Those policies have traditionally been sold to individuals without employer insurance, which is now the role of the state and federal health exchanges where consumers can receive subsidies to help pay the cost of premiums.
For many insurers, the decision to cancel policies was made long ago as they figured out how to adapt to the health law, so restoring them makes little sense, said Christine Monahan, formerly the senior health policy analyst at the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute. “In most states, insurers could renew plans early without canceling them,” she said. “This means they probably made strategic decisions about which they wanted to renew—if any at all—and which they wanted to cancel before the administration’s announcement.”
Other experts say the administrative costs of going back on the cancellation decision outweighs the benefit for insurers. Some experts have estimated that 7 million people or more will receive cancellation notices. The individual insurance market represents about 5 percent of the U.S. population.
About 18 states and the District of Columbia have refused to allow insurers to reissue canceled policies, according to the Commonwealth Fund, a pro-ACA research group. Among them are the law’s staunchest supporters, such as California and Washington State, but also Nebraska and Indiana, which have limited their participation. At least 19 other states, including some that are expanding Medicaid and hosting their own insurance exchanges, are letting insurers restore policies.
In Ohio, which is expanding Medicaid in 2014 but is under Republican control, no insurers have reissued canceled policies following Obama’s announcement, though the state didn’t issue guidance to insurers until Dec. 3. In Michigan, also under Republican control but still expanding Medicaid, four insurers just barely met the state’s Dec. 10 filing deadline. None of them crack even 7 percent of the state’s 336,000-person individual market, according to the Kaiser Family Foundation. In Alabama, Blue Cross and Blue Shield, which holds a 90 percent market share, declined to rescind 87,000 cancellations. In Missouri, which has a Democratic governor and a Republican legislature, only one insurer has decided to reissue canceled policies, though the carrier, a Blue Cross HMO, declined to say how many policyholders are affected.
In other states Blue Cross has been the only insurer so far that has agreed to restore policies into 2014, but because the insurer holds such a substantial market share those decisions have given hundreds of thousands the option to continue their plans at least temporarily.
In Florida—where most insurers took advantage of early renewals before Obama’s announcement, at least in part because of outreach from state officials—Blue Cross will offer reissued policies to about 370,000 people. The total individual market in Florida is nearly 800,000, but Blue Cross claims about half of it. In North Carolina, where about 473,000 people have received cancellation notices, Blue Cross is extending policies for 230,000 people. In Tennessee, a state with an individual market of 246,000, Blue Cross is again the only insurer that has yet agreed to reissue policies, in this case about 66,000.
Other southern states have had far greater participation. In South Carolina, 15 carriers are restoring about three quarters of the state’s canceled policies. In Kentucky, a state that’s been active in the new health law and drawn praise for its role in implementation, three of the four major insurers on the individual market will offer or plan to offer reissued policies.
Other states, such as Wisconsin and Texas—both opposed to the new health law—have guarded against significant numbers of cancellations by aggressively pushing early renewals among carriers. Wisconsin issued guidance for early renewals in the spring, well before cancellations drew headlines. “I think most consumers and businesses were already taking advantage of early renewals at rates that were higher than insurers were expecting,” said J.P. Wieske, a spokesman.